James Packer bets on cyber security to grow fortune

At the heart of it James Packer is an entrepreneur. He has rolled the dice on many businesses from digital start-ups to casinos but curiously this intensely private billionaire who cut his financial teeth on splashing news across his media empire is now working to grow his fortune in cyber security.

The restless billionaire rode into Australia a few days ago on a whistlestop tour, meeting with numerous constituents from politicians to media.

James Packer, Crown Resorts chairman, is an entrepreneur at heart.Credit:Pat Scala

His agenda was not particularly apparent. Maybe it was personal or perhaps it was related to his main investment in Crown Resorts.

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But in the process of a breakfast held with a small clutch of financial media it was clear that Packer is building infrastructure around his newest venture – cyber security. Packer is leveraging his close relationship with Hollywood and Israel (where he is now a resident) to launch a venture which he sees has enormous growth potential.

Illustration: Rocco Fazzari

If Packer finds a winning hand in this endeavour it will undoubtedly make him a lot richer. There is no shortage of companies in the cyber security game so the technology he employs will need to add something to what is now on offer from others. Cracking the code to enhancing corporate security is highly bankable.

Governments, financial institutions and utilities would be willing customers if his new joint-venture investment can improve the current technology.

"We are working on a number of investments in the technology sector, mostly in the data storage, social gaming and information security areas. As part of this work, CPH is looking at the IT sector in Australia, Israel, USA and Asia involving our partnership with Paul Bassat – through our Square Peg investment vehicle," he says.

But Packer is the first to admit that he is not about to launch another capital-hungry enterprise like the old world casino or media businesses.

He made a lot of money selling out of traditional media assets at the right time and has made plenty more cash from punters rolling the dice at his casinos.

He has also made the right call on early digital start-ups like Seek and Carsales but sold them before they reached their full potential.

While punting relatively small amounts of money on new ventures appears to be the thing that keeps the adrenaline coursing through his veins the investment in the casino empire is what pays for Packer's digital bets.

Losing out to Echo a few weeks back in the bid to build an integrated casino in Brisbane doesn't appear to have delivered a major setback.

Casinos businesses can be great cash cows but they don't come cheap.

There is certainly a suggestion around that Crown's Brisbane bid was as much about forcing Echo to pay top dollar as it was an attempt to secure a new development in Queensland. It was probably a bit of a bet each way.

Casino businesses can be great cash cows but they don't come cheap.

"I've spent an enormous amount of capex over recent years, but I am trying to build a global network of iconic resorts to show the world the quality of our luxury brand," Packer said.

"The plan is to create an iconic global business, unfortunately my old media portfolio just wasn't scalable globally.

"In 2007, I spent a shitload of money, but despite my foray into Vegas being a disaster, my investment in Macau has paid off."

Had it not been for the corruption clampdown by the Chinese government the investment would have been even more profitable.

Experts maintain that the silver lining to the problems in Macau is that it has encouraged Chinese VIPs to travel to Australian casinos – with Crown and Echo's Star being beneficiaries.

His initial investment in Crown Melbourne has been a financial winner but the real test will emerge when the Sydney casino ultimately opens its doors. But when that will actually happen depends on all manner of approvals. Given its iconic location and proposed height the development has been the subject of all manner of planning issues.

For example in a submission to the revised concept plan for Barangaroo South, Sydney Observatory warned high-rise towers, including Packer's 69-storey casino and hotel complex, will significantly restrict its view of the Southern Cross constellation.

Estimates that the Barangaroo project is now a year behind schedule are not disputed by the Crown camp although there has been no official word on any change in the timing.

Across the water in Sydney the owners of the Star Casino, Echo Entertainment, will be hoping that the delays to Barangaroo with be even longer as the introduction of competition will affect the Star's earning capacity.

When the Barangaroo casino complex is finally built it will be the most expensive construction cost per room of any hotel casino in the world – albeit a build that will be cross subsidised by the sale of apartments.

Meanwhile Packer is counting on the fact that those VIPs that travel south to Australia for a gaming holiday will try their hand at his other brand-Crown properties including Perth and Melbourne.

Packer said in his last conversation with his father, Kerry told him "It's your life and you live it your way".